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Research: Advantages and drawbacks of doing business with credit cards -

Many small business owners benefit a great deal by doing business with credit cards as they are specifically designed to help business owners to run their businesses successfully. Business credit cards carry a lot of benefits for card holders, but they also have some inherent problems that are associated with them as well. By the end of the day, it all depends on how well you use these cards as a business owner.

There are a number of friendly payment schemes that are offered by credit card companies on business credit cards. For instance, if you have a huge expense to make for your business, you may separate it from the outstanding balance. The card company will help you draft separate payment plans for that debt, while the remaining expenses on the card can be taken care of in the normal way. This way, your credit history will not get affected by a single large expenditure. The payments will also not attract penalties.

If you are a small business owner and have a few employees, then you may use the option of taking on the add-on cards. You can hand this out to your employees. These add-on cards have 2 benefits. First of all, the expenses that are incurred by the employees will help in getting you additional reward points which can later be redeemed through the use of your card. This can also be used as a mode of payment where salaries can be paid.

The biggest advantage in using these business credit cards is that you will have a chance to get an overview of the overall expenditure and income related to your business with the help of your monthly expense report. This will give you a better idea of your expenses and where most of the money has gone. You can also spot wastage and cut down your expenses in the future. This report can be very useful while auditing or tracking business-related expenses.

You will have a card debt that would be available based on the credit limit you have. This can work both ways while you do business. The credit card may be used to make payments and you can transfer cash from the savings account even after a month or more after the actual expense has occurred. But, the risk of paying a high rate of interest is always there. This may sometimes be much more than what the banks charge or more than the loan interest.